What is a Debt Management Plan? Debt management plan refers to a methodology that is implemented in various countries including Canada. Debt management plan is a strategy for the repayment of an individual’s debts that are not secured. These debts which are tackled with debt management plan are not in the customer’s control. The smallest of payments are also delayed and a large chunk of income is taken away.

Sometimes the debt even exceeds the income. A debt management plan generally is a process where in a completely unconnected organization or a bureau performs the task of budget and income assessment, negotiation of payments and rate of interests along with conglomeration of debts. All this is done with the lender Company or organization. The rates of interest that are finalized are based on the debtor’s financial position and the plausibility of him or her repaying them on a monthly basis.

The Canadian debt management plans are typically arranged and managed with lenders through an organization that is unconnected with the transactions. A debtor is permitted to utilize either a debt management company or debt settlement firm that charges a fee or a debt management plan company that has been sponsored by the creditor. A debt management plan organization will place certain proposals representing the debtor and these are usually at the creditor’s discretion. Any decent debt service and advice will suggest and endorse a transaction or a system of finance management wherein the customer or the debtor is in a position to pay off his or her debts even after giving his or her expenses a higher priority. Any credit providing organization reviews the financial life of a debtor to ensure that the debtor is paying his or her debts on a regular basis.

A debt management plan in Canada includes the following tips and terms that are to be done by the debtor. Firstly the debtor must try to repay all of his or her debts. Sometimes the creditor may provide some kind of a leeway or exemption from paying some of the debts. However this may not happen always. Secondly, the creditors generally stipulate a time for the debt repayment from the debtors. This is usually a period of four years for clearing all the debts of an individual. Sometimes this period is even extended to five years or so.

The creditors may in some special cases agree to eliminate or reduce the rate of interest levied on the debt. This can be negotiated between the creditor and the debtor. All the creditors may no follow this rule or they may even be not remotely considerate and impose stringent rules. Any kind of agreement that the creditor indulges in is not a legal requirement, it is completely through the creditors’ own wishes. The garnishing of the debtor’s salary is not terminated until the creditor accepts to do so. Debt counseling is another aspect of debt management planning. This is of great help to the customers in paying off their debts. What is a Debt Management Plan?

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